If you are able to develop great savings habits and strategies, you can quickly work your way up the wealth ladder.
One truth is that anyone who has made money can clearly demonstrate how saving money was instrumental to his success.
And yes, the best time to even start getting your savings together is when your income is small.
This is contrary to the erroneous belief that you only start to save when your income increases.
The truth is that if you don’t start to save when your income is small, the income might never increase.
And yeah… There are few miseducated people who don’t know anything about the true meaning of savings.
They are the ones who are making fellows with statements like “The rich don’t save!” which happens to be one of the most ridiculous statements I have ever heard about the subject of savings.
Saving money Is an act and art. The process of doing it is the ACT while what you do with the savings is the ART.
Yes, saving money might not make you rich, but it will surely get you started on the journey.
The person who has no money saved is always the person trying to tell others why they too shouldn’t.
The truth is that in all my conversations and study of millionaires, what I figured is that they always have savings. I have not seen any rich man who never saved money to take advantage of opportunities.
WHAT DOES IT MEAN TO SAVE MONEY?
Savings is defined as a systematic and deliberate process of compulsorily setting aside a specific percentage of every income for a predetermined future purpose.
When you understand savings in its truest meaning, then, you’ll be able to save the right way and also use your savings to move forward.
Hoarding or piling up money in the bank is not saving money. There is no sense in doing this, but this is what so many people do and confuse it with saving money.
With Household Saving Rate in Canada decreasing to 11% in the first quarter of 2021, the obvious truth remains that if you want to make financial progress, you must find creative savings strategies that will help you to save money from your salary or income each month.
Why is it important to save money?
With the ease of accessing credit, why should anyone even bother to save money or have savings strategies in the first place?
Well, there are 3 important reasons why everyone must find creative ways to save money.
The first reason why it is important to have savings strategies is the Prosperity attraction. Opportunities go to those who are ready to seize them.
When a person doesn’t have some money saved up, he won’t be able to take advantage of investment opportunities when they come his way.
And when you pass over opportunities repeatedly, you become POOR.
The other reason is to keep you safe. Having emergency savings for example helps you to have peace of mind.
The assurance that you can take care of any immediate emergency is one strong emotional safety net that everyone should have.
This mindset will help reduce the escalating debt problem that Canada is currently facing as a survey indicates that 73% of Canadian households have some type of debt or use a payday loan to meet up with financial emergencies.
Another reason why it is important to have savings strategies is to help you build Discipline.
Saving money is what I refer to as a cardinal habit.
It is one habit if you take the time and effort to develop, it will affect other important areas of your life and vice versa.
From my research and observation, one thing that I have seen is that those who have built the habit of saving money are more organized in many other areas of their life than those who don’t.
So, developing the habit of saving money will save many other aspects of your life.
The truth is that what the rich think about saving money is different from what the poor and middle class think.
A Harvard study suggests that those who earn more have more positive behavior towards savings than those who don’t.
The study discovered that Saving rates are even larger for 37 percent for those in the top five percent of the income distribution and 49 percent for those in the top one percent, with those in the top 1% saving nearly half of their income.
What percentage of your income should you save?
Should you save 20% more of your income or less?
Well, the percentage you will save depends on your reality.
One of the first creative things to do is to create a savings category. This will help you know where your savings effort will be focused.
How important these categories are to you will also determine how much of your salary or income you will be willing to save for each category monthly
There are about 5 categories of savings you need to have.
But you might not need it all at the beginning. It will be best for you to start with the one(s) that are important to you.
The various categories to consider are…
Financial freedom savings. This savings is specifically meant for investment purposes.
The money here can only go out for multiplication reasons and must return with interest.
Emergency savings. This savings is meant to help you take care of emergencies. It gives you some form of financial security by helping you meet unexpected expenses without having to run up your credit card balance.
Research and Development Savings. This savings is for your personal development. It is this category that helps you to buy books, courses, programs, events, and everything else that helps you to advance in your life and career.
Fun Savings. This is more like your FU money.
It is that savings that will help you to have fun without being worried about messing up your budget.
Special project savings. This category of Savings will help you to take care of special projects.
This could be making a down payment for your first house, preparing to get married, having your child, sending your child off to college, taking a trip overseas, etc.
What you define as a special project is up to you. But you need to learn how to save for it.
What are the best strategies for saving money?
I will be sharing with you 9 savings strategies that you can experiment with to help your savings journey in Canada
- Create Savings Goals.
One of the best ways to save money is by setting a goal of what you are saving for.
The motivation that you need will come from the motivation and visualization power of the end result.
Do you Want to buy a house in three years with a 20 percent down payment? A simple clear goal like this can help you save money faster unless the goal isn’t motivating enough.
2. Create a Savings WHY. This is the compelling reason why you want what you want in the first place.
If for instance, you want to buy your first house debt-free so that you can move your kids and have absolute control over where and how you live, you will be more motivated to save than if you just set a goal to buy a house.
An emotionally compelling why makes your savings strategies and goals work better and faster.
3. Create a Savings System. This is a Structured way of paying yourself first. It will summarize the system, process, habits, and necessary routine that will get you to save each month.
Your savings system will help you to automate your savings as it will serve as your guiding compass to help you save money without having to think about it.
Because if you have to think about it, you are most likely not going to do it.
4. Create Savings Categories. Create the categories of savings that you need to have.
If for example, your immediate goal is to save for emergencies and to start investing in the stock market, the categories you might need to create are Emergency savings and financial freedom savings.
As you meet these goals, then you can create more categories
5. Have a Receiving Account.
Have a single account that serves as your cornerstone account.
That is where all your money and income will first drop.
From this account, you can then make a transfer of funds to the other accounts you have created for your various savings categories.
you can easily put a standing order on this account to help you automatically make your saving without having to think about it while keeping a clean record.
You don’t have to pick just one bank.
Look carefully at all of your options and consider things like balance minimums, fees, and interest rates so you can choose the mix that will help you best meet your goals.
6. Deal with bad money habits and behaviors.
We don’t have money problems, what we have is a problem of habits.
This means that if we can correct our bad money habits, our money problems will correct themselves.
It doesn’t matter how well you mean for yourself, if your money habits and behaviors are not in alignment with your goals, you will always struggle financially.
7 Spend to Save
Let’s face it, the cost of things hardly go down.
One smart way to stay ahead might be to make sure that you are spending money on your needs and doing it the right way.
Take energy cost, for example, you can call your utility company and ask for an energy audit or find a certified contractor who can give you a whole-home energy efficiency review.
You could also improve your home from sealing windows and doors all the way to installing new insulation and installing high-efficiency appliances and products.
You could save thousands in utility costs which will easily help you to improve your savings over time.
8. Investigate your financial leakages and block them.
Money could be leaking out of your life in a way that you never imagined.
For example, if you pay $20 a week for snacks at the vending machine at your office, that’s $1,000 you’re removing from savings for snacks each year.
It is important for you to decide on your spending priorities and cut down on everything else.
9 Create a spending plan and stick to it.
The money you don’t plan for will surely plan against you.
A budget should be nothing but a plan on how you are going to direct your money within a period.
For your savings strategies to work, you must get better at creating and sticking to your spending plans.
In Conclusion
Saving money is one key habit that will not only give your financial peace, it will also help your money and your life together.
I hope you learned a few new neat tricks to help make your savings strategies work.
Start by getting into a saver’s mindset, and everything else will fall into place!
